Apple is beginning final preparations to launch an iPhone trade-in program in its retail stores by next month, according to sources with knowledge of the initiative. This trade-in program will allow customers that own earlier versions of the iPhone, such as the iPhone 4S, to bring the phone into an Apple Store and exchange it for a new iPhone model, like the iPhone 5, at a discounted price…

On the allure of a trade-in program, Apple CEO Tim Cook said during the last earnings call that he is “not opposed” to such a strategy. “I see channels doing it, and I like the environmental aspect of it, and so that part of it really is encouraging to me,” he said.

Third-party iPhone sales channels like Best Buy, Verizon Wireless, and AT&T have been pushing their own trade-in programs for several months.

As we reported earlier this year, the iPhone trade-in program is designed as a critical component of Cook’s blueprint to bolstering iPhone sales in his chain of stores. Cook explained to Apple Retail leadership that he does not feel iPhone sales are healthy enough at Apple’s stores. 80% of iPhones are not sold directly from Apple Retail, Cook told these employees.

With the new ability to exchange an iPhone and receive a fresh new model at a discounted price, perhaps the iPhone trade-in program will help meet Cook’s goal of selling more iPhones direct from his stores.

A critical aspect of this is actually driving traffic to Apple Stores so that new iPhone customers are exposed to the entire Apple ecosystem. When a customer visits an Apple Store to purchase their new iPhone, they will be immediately made aware of other Apple devices like iPads and Macs. That’s not to say the program will not be built for simplicity: the goal is for a customer to be able to walk in with an old phone and out with a new phone within minutes.

In order for the program to launch and exist seamlessly, Apple will begin training the majority of its retail employees on the program throughout this week. Employees are said to be required to fulfill at least two hours of training. This training must be complete by the end of the first week of September.

While formal training will begin this week, Apple has been conducting limited pilot testing for the program in recent months. According to one person with knowledge of the piloting, a couple of Apple Stores in the Dallas, Texas area have internally tested procedures for the trade-in program. In addition to this week’s training, deliveries of empty shipping boxes have arrived at Apple Stores. These boxes will be used for Apple Stores to ship traded-in handsets. It is plausible that these devices will be refurbished and re-sold in emerging markets.

With rumors of new iPhones gaining mainstream attention in recent months, perhaps it would behoove Apple to wait until after the new device launches to provide the trade-in program. This could spur even more upgrades to the new products. On the other hand, beginning the trade-in program before the new iPhones launch could boost iPhone 5 sales, a device that Apple will likely want to clear inventory of if it will, in fact, be discontinued come the end of September.

Apple is said to have originally planned to launch the iPhone trade-in program during the last week of July, but the program’s launch was pushed back for unspecified reasons. Besides being designed to increase iPhone sales, Apple is said to believe that the trade-in program will incentivize customers with damaged iPhones to seek a trade-in for a newer device, rather than clogging up the Genius Bar to receive a refurbished replacement phone. This, in turn, could allow the Genius Bar to provide a deeper focus on issues that could not be as easily resolved as a replaceable iPhone.

Could be interesting depending on how much of a discount they offer. They’d have to beat what Gazelle is offering, which in itself is not all that much considering what used iPhones are going for on Ebay.

Not necessarily. The majority of consumers have never even heard of Gazelle, let alone have the desire to go through the trouble of selling their iPhone to a third party. All Apple would have to do is make the process simple and offer enough of a discount on the new phone for the customer to deem it worthwhile.

The replacements through the Genius Bar are not refurbished. They are remanufactured. Unfortunately employees have misinformed tons of people over the year with calling the replacements refurbs but if you look into the AppleCare agreement paperwork, they are remanufactured. This means they go through the same manufacturing process, are tested more strenuously than retail level products, but may have some non vital used pieces.

I’m excited about possible trade in options though! I never trust the carriers. I’ve met too many people who were sold refurbs as new from carriers.

This is really going to be hard for iPhone businesses. I personally own a buyback site and its not going to be easy. You cant compete with Apple. It just wont work.

Gazelle comes to mind as the biggest company, and i’m sure they will be “feeling it” when Apple really markets hard towards this. All we can hope is that Apple wont take all of the small businesses income.

Apple also is making more colors I hear? This also takes away business from iPhone mod people that do it for a living.

What is next? unbreakable glass so that iPhone glass repair shops go out of business also?

I would suggest Apple to do the same with ALL the other devices; they could fix percentages of discount depending on how “old” is the device, and then users could return the old Mac directly to the Apple Store and getting out with a new one.